Have you Heard of Green Bonds?

Green Bonds are fixed-income instruments used to finance Green Projects – defined as projects and activities that promote climate or other environmental sustainability purposes. Green Bonds enable capital-raising and investment for new and existing projects with environmental benefits including clean energy and brownfield site development (sites with the presence of a hazardous substance, pollutant, or contaminant).

Recent activity indicates that the market for Green Bonds is developing rapidly. In 2013, there were over $10 billion in green bonds issued. It is projected that the market for green bonds will more than double in 2014, to $25 billion. Recent new green bonds are so popular that the demand is greater than current availability. Institutional and individual investors are very interested in investing in green bonds.

To enable more individual investors to invest in Green Bonds, Calvert Investments recently launched a Green Bond Fund. The fund typically invests at least 80% of its net assets in “green” bonds of any maturity.

“Green” bonds may include those issued by companies that develop or address environmental solutions, or that support environmental projects, among others. The fund will also apply environmental, social and governance (ESG) screening to these companies.

In recent news, The Clean Energy Victory Bonds Act was introduced in April in the House of Representatives. The bill will allow all Americans to invest in Treasury Bonds for as little as $25 each that will fund a clean energy future. The $50 billion raised from the bonds will fund clean energy programs that support wind, solar, energy efficiency, and electric vehicles in the United States. To find out more about this go to http://www.cleanenergyvictorybonds.org/.

Green bonds are quickly emerging as one of the most competitive options for financing the trillions of dollars needed for a low-carbon infrastructure. Green Bonds are an ideal financial vehicle for the challenge of climate change in that their ability to scale and be deployed quickly matches the urgency of climate change.